Bloomberg Exam Questions with correct Answers

Corporate bond issuers go bankrupt more frequently than governments, as they do not have a tax base to fall back on in hard times - ANSWER-Why did the corporate spread significantly widen during the 2008 market crash? what does it mean when a company's corporate spread tightens? - ANSWER-the company's bonds are outperforming the benchmark yield what are the three main transmission mechanisms by which the yield curve affects the economy? - ANSWER-corporate impact, global impact, consumer impact What is the 10-year to 3-month term premium of the following yield curve? - ANSWER-0.079% The purchase of which of the following products is most affected by interest rates? - ANSWER-apartment What is the primary driver of the left-hand end of the yield curve? - ANSWER-central bank interest rates Which of the graphs most clearly represents investors predicting a downturn in the economy? - ANSWER-A The two yield curves in the chart are from September 10, 2001 (yellow line) and from October 10, 2001 (green line). What do you think the Federal Reserve did with interest rates in the month following the attacks of September 11, 2001 - ANSWER-cut interest rates Look at the below yield curve inversion chart. What is most likely to happen as a result of the most recent yield curve inversion shown? - ANSWER-GDP will dip Why do companies do IPOs? - ANSWER-IPOs incentivize entrepreneurs to innovate as IPOs provide a way for entrepreneurs to monetize their work Why do companies manager-owners smile when they rind the stock exchange bell at their IPOs? - ANSWER-an IPO reveals the value of the manager-owner's stake The Dow Jones Industrial Average index has an unusual weighting methodology. Unlike the S&P 500, it is weighted by share price. Here are 20 of the 30 members of the Dow Jones on March 20, 2019. If all the shares went up by 5%, which share on the screen shown would have the biggest contribution to an upward movement in the index? - ANSWER-Goldman Sachs In 1999, James Glassman and Kevin Hassett published a book called "Dow 36,000". At the time, the Dow Jones Industrial Average Index was just under 12,000. Which of the following is a potential substitute for the book title? - ANSWER-The Sum of the Share Prices of All 30 Dow Jones Members Will Triple Here is a chart of the index value for the S&P 500 and the United Kingdom's main equity index, the FTSE 100, from the end of 2008 to early 2015. The labels have been removed. One index has clearly outperformed the other. Over this period, there was a technology boom and an oil crash. Here are pie charts showing the early 2015 index compositions by industry for both the S&P 500 and the FTSE 100. Which index outperformed? - ANSWER-The S&P 500 Index What is the prime reason that Jenny's discretionary income is more volatile than her salary? - ANSWER-Her mortgage payments and necessities are fixed A luxury cell phone maker has a high fixed-cost base and a lot of debt. Which stakeholder in the company would you rather be? - ANSWER-A shareholder in a booming economy The S&P 500 stood at 1848 at the end of 2013. According to the chart, what would the approximate return be on the S&P 500 from the trough of March of 2009 to the end of 2013, ignoring dividends? - ANSWER-170% Assume that an investor in the S&P 500 reinvests his dividends. According to the chart, what approximate return would this investor have reaped from the early 2009 trough to the endpoint of the chart? - ANSWER-340% Why are equities volatile? - ANSWER-Due to the residual nature of earnings which of the following statements is true? - ANSWER-When you buy an equity, the most you can lose is 100% and your potential gain is unlimited Company A pays a dividend of 2%. Company B's stock price increases by 1% plus the inflation rate every year. Company C pays 3% dividends, and its stock price decreases every year by 2%. Company D pays 0% dividends, and its stock price does not increase year over year. If the companies are otherwise identical, which would you invest in? - ANSWER-Company B You buy the stock of four consumer goods companies in March 2014 and hold them for five years until March 2019. Here are the TRA charts from Bloomberg for all four stocks. The "Buy Price" in the top left-hand corner is the price you paid for each stock. The price of the stock in March 2019 is noted in the chart's legend. The legend also states the Dividend Adjusted Value of the stock in March 2019, which is the value of the stock including reinvested dividends over the holding period. For which stock did the bull of the total return come from dividends? - ANSWER-Unilever What does the release of earnings announcements have in common with the release of economic indicators? - ANSWER-Both are scheduled in advance The number at the bottom right of each supplier's box shows the portion of Boeing's total costs in the last year that went to that supplier. The number at the bottom right of each customer's box shows the portion of the customer's capital expenditure (money spent on high value purchases) in the last year that went to Boeing. What is the capital expenditure (CAPEX) for Boeing's largest airline customer? - ANSWER-60.68% Which company is most exposed to the ups and downs of the aircraft engine industry? - ANSWER-MTU Aero Engines Engines are the most expensive, heavy component on an aircraft and are designed with detailed specifications. Which of the following would likely be the best theme for a Rolls-Royce analyst research note to help a portfolio manager decide between investing in Rolls-Royce or United Technologies? - ANSWER-A comparison of the commercial prospects of new aircraft models You are an analyst for a home-building company tasked with creating a financial model of home-building trends. Which of the following factors should your model address? - ANSWER-The price of wood products and long-term interests rates Here is a table from Bloomberg intelligence aluminum dashboard which shows the different end-users of aluminum in China. Which of the following Bloomberg headlines would be of most interest to an aluminum trader in China? - ANSWER-China's Aluminum Demand Weathers Real-Estate Slowdown So Far When an analyst is looking at a company for the first time, which of the following four activities does he do first? - ANSWER-Defines the industry or industries in which the company operates Below is a table for the steel producers Dashboard, which shows the sources of demand for steel products globally. Given the data, which of the following would be of most interest to prospective investors in steel? - ANSWER-The impact of China's recession on the commercial real estate market Masco is a consumer discretionary company that focuses on home improvement products. Here is a breakdown of the revenue concentration by industry. Which of the following headlines would be of the most interest to potential investors? - ANSWER-Kitchen and Bathroom Remodeling is up more than 8% as Homeowners look to improve house values Company X was expected to have earnings per share of $0.52 for the upcoming quarter. On the day of the results, the company reported earnings per share of $0.83. What happened to the share price when the stock market opened? - ANSWER-There is not enough information to tell Which company is worth less, Coca-Cola or Pepsi? - ANSWER-Pepsi because it has a lower market capitalization Widget Co has a market capitalization of $125M. It does a 5-for-1 stock split. It does a 1-for-25 reverse stock split. Finally, it does a 35-for-1 stock split. Nothing else changes. What's the new market cap? - ANSWER-$125